Pituitary secretory vesicle enzymes involved in the processing of pro- opiomelanocortin (POMC, pro ACTH/endorphin) were studied. A 70,000 mol. wt. Ca++ activated aspartic protease specific for paired basic residues of POMC (POMC converting enzyme PCE) has been purified in sufficient quantities for microsequencing. A yeast aspartic protease encoded by the YAP3 gene which processes pro-alpha-mating factor has been overexpressed in a yeast strain lacking aspartic proteases. The YAP3 enzyme has been purified and shown to have specificity, inhibitor profile, size and immunological properties similar to the mammalian PCE. PCE appears to be the mammalian homologue of YAP3 enzyme. YAP has been co-expressed with POMC in GH3 cells. YAP3 was shown to process POMC in these cells in a manner identical to the purified enzyme in vitro. An acidic, Ca++ activated serine protease specific for the tetrabasic sites of ACTH has been isolated and partially purified. A PC2-like serine protease which cleaves POMC at paired basic residues and the tetrabasic residue site of ACTH has been identified in bovine secretory vesicle membranes and partially purified. A mono-/dipeptidyl carboxypeptidase which cleaves ACTH1-39 to ACTH1-38 and ACTH1-37 has been identified, characterized and partially purified from bovine intermediate lobe secretory vesicle membranes. The signal involved in the targeting of POMC to the regulated secretory pathway was also investigated. Truncated POMC/CAT constructs transfected into AtT-20 cells indicated tat the first 26 amino acids of POMC which forms a hairpin loop stabilized by two disulfide bridges contains the signal for targeting the prohormone to the regulated secretory pathway. POMC mutants with the N-terminal hairpin loop, or one of the disulfide bridges removed failed to be targeted to secretory granules. These results indicate the importance of the unique conformation and disulfide bridges of the N-terminus of POMC in facilitating targeting of this prohormone to secretory granules.